Socio-economic importance of the RAB & Laurel Wilt Disease

Dr. Edward ‘Gilly’ EvansAssistant Professor and Associate Director

University of Florida, Center for Tropical Agriculture

Potential Economic Impact of the Laurel Wilt Disease on the Industry

• Estimate the direct losses:– Discussions with industry experts, growers, extension agents– Use internet tools such as tree value analysis tool available at

http://agecon-trec.ifas.ufl.edu/TreeCostAvocado.htm

• Estimate the indirect or ‘spillover’ losses (local impacts)– Much more challenging; requires the use of an input-output model– Use economic model known as IMPLAN input-output multipliers

• Focus on 3 scenarios:

Estimates of Direct Cost ($)Item Do Nothing 75%

Reduction in Production

50% Reduction in Production

Industry Sales Loss $30,000,000 $22,500,000 $15,000,000

Decline in Property Value $326,250,000 $244,688,000 $163,125,000

Increased Management Costs

― $3,510,000 $3,510,000

Total$356,250,000 $270,698,000 $181,650,000

Estimating the Economic Impact on Local/Regional Economy

• Input-Output model • Interdependencies among industries and

the associated primary factor of production

Avocado Industry

Fertilizers $$$ labor income

$$$ Gov. Tax

OutputInputs for other industries

Packing materials

Chemicals

Fertilizers $$$ labor income

$$$ Gov. Tax

OutputInputs for other industries

Packing materials

Chemicals

Economic Impact of Laurel Wilt on the Local Economy

Item Base Case 75% Reduction in Production

50% Reduction in Production

Industry Sales$30,000,000

Total Economic Impact (output)

Employment Impacts (FTE)

Labor Income Impacts

Indirect Business Tax

Economic Impact of Laurel Wilt on the Local Economy

Item Base Case 75% Reduction in Production

50% Reduction in Production

Industry Sales$30,000,000

Total Economic Impact (output) $54,266,259

Employment Impacts (FTE) 546

Labor Income Impacts $19,674,272

Indirect Business Tax $1,862,415

Economic Impact of Laurel Wilt on the Local Economy

Item Base Case 75% Reduction in Production

50% Reduction in Production

Industry Sales$30,000,000 $7,500,00

Total Economic Impact (output) $54,266,259

Employment Impacts (FTE) 546

Labor Income Impacts $19,674,272

Indirect Business Tax $1,862,415

Economic Impact of Laurel Wilt on the Local Economy

Item Base Case 75% Reduction in Production

50% Reduction in Production

Industry Sales$30,000,000 $7,500,00

Total Economic Impact (output) $54,266,259 $13,566,565

Employment Impacts (FTE) 546 136

Labor Income Impacts $19,674,272 $4,918,568

Indirect Business Tax $1,862,415 $465,605

Economic Impact of Laurel Wilt on the Local Economy

Item Base Case 75% Reduction in Production

50% Reduction in Production

Industry Sales$30,000,000 $7,500,00 $15,000,000

Total Economic Impact (output) $54,266,259 $13,566,565 $27,133,130

Employment Impacts (FTE) 546 136 273

Labor Income Impacts $19,674,272 $4,918,568 $9,837,136

Indirect Business Tax $1,862,415 $465,604 $931,208

Economic Impact of Laurel Wilt on the Local Economy

Item Base Case 75% Reduction in Production

50% Reduction in Production

Industry Sales$30,000,000 $7,500,00 $15,000,000

Total Economic Impact (output) $54,266,259 $13,566,565 $27,133,130

Employment Impacts (FTE) 546 136 273

Labor Income Impacts $19,674,272 $4,918,568 $9,837,136

Indirect Business Tax $1,862,415 $465,604 $931,208

Further Implications of Disease Complex

Table 1: Replacement cost based on value of avocado trees*

Unit Miami-Dade Broward Palm Beach Lee TOTALNo. of commercial trees No. 643,800 870 2,610 7,830 655,110No. of backyard trees No. 250,000 182,554 131,898 61,830 626,282

TOTAL TREES No. 893,800 183,424 134,508 69,660 1,281,392 Replacement Cost (commercial) $ 212,454,000

287,100

861,300

2,583,900 216,186,300

Replacement Cost (backyard) $ 82,500,000

60,242,721

43,526,275

20,403,970 206,672,967

TOTAL COST $ 294,954,000

60,529,821

44,387,575

22,987,870

422,859,267

Table 1: Replacement cost based on value of avocado trees*

Unit Miami-Dade Broward Palm Beach Lee TOTALNo. of commercial trees No. 643,800 870 2,610 7,830 655,110No. of backyard trees No. 250,000 182,554 131,898 61,830 626,282

TOTAL TREES No. 893,800 183,424 134,508 69,660 1,281,392 Replacement Cost (commercial) $ 212,454,000

287,100

861,300

2,583,900 216,186,300

Replacement Cost (backyard) $ 82,500,000

60,242,721

43,526,275

20,403,970 206,672,967

TOTAL COST $ 294,954,000

60,529,821

44,387,575

22,987,870

422,859,267

Wider Implications of Disease Complex

Latin Amer-

ica and Car-

ibbean

66%

Other coun-tries34%

World Avocado Production

2008

Concluding Remarks

• Together, the ambrosia beetle and laurel wilt disease represent a serious threat to the Florida avocado industry.

• Currently, the industry generates an economic impact of over $54 million dollars, contributes to agricultural labor employment, and is a source of $1.9 million annually in government revenue.

• Longer term the disease complex represents a threat to California avocado industry as well as avocado production in Latin America and Caribbean countries.

Thanks